Bad fiscal management leaves T&T economy in poor state

Trinidad and Tobago's economy is in "a mess" because of "pathetic" fiscal management by the previous People’s National Movement (PNM) government.

That's the view of Finance Minister Winston Dookeran who told reporters Thursday part of the problem has been too much expenditure on the non-productive sector. He told the Trinidad Express no revenue is coming into the country because growth has fallen.

The minister blamed the problems on bad priorities, corruption and wastage. "We just kept spending money without having an income stream," he said.

He said the economic boom is over and the task ahead is to begin "pulling ourselves back" getting to work again.

He told the paper he has already submitted to cabinet a comprehensive report on the economy in which he has stated that things do not look good.

Dookeran cited several bad fiscal decisions by the Manning administration that he said are partly responsible for the poor state of the economy. These include the multi-billion-dollar financial rescue of the CL Financial Group.

Dookeran told the paper he has appointed several teams to report on various aspects of the economy. He said there are "many worrying directions" ahead including the fiscal deficit expected at the end of the current year.

"We have seen a dramatic decline in the cash balances of the country and at this point in time, we believe that can be an area of great risk for this nation," he said.

Dookeran said the country is currently borrowing to pay for its recurrent expenditure, stating that the deficit in that regard will reach $788 million in the current year. He also said foreign reserves and the rising balance of payment deficits are cause for concern.

The minister is particularly worried about the national public debt, which he said is around 51 per cent of the country's gross domestic product. And that does not include the State enterprises debt.

Dookeran said while foreign reserves are now about US$8 billion "the direction in which it is moving within the last few years is troubling; each year it is being reduced significantly from where it was the previous year".

He said the country’s savings cannot help the situation because the Revenue and Stabilisation Fund has only US$3 billion and the Manning government did not add to it for 2009/2010, which is a violation of the legal rules governing the fund.

Commenting on the CL situation, Dookeran said the former government "wrongfully got itself in this position and having done so, it is now left upon us to find a way out of that situation, at least from the point of view on the demands of the public Treasury".

Despite the gloomy economic picture, Dookeran said the People’s Partnership government will be able to keep its manifesto promises and pledges for its 120-day plan. However he said some of the proposals may have to be phased in.